Transcript of questions and answers at media briefing by Deputy President Kgalema Motlanthe on the Gauteng Freeway Improvement Project

1 June 2012

Mr Jimmy Manyi: We'll take questions now and as we do can I just request that even if you ask a question for the second time, please always identify yourself just so that we can have a clear record of what is being said here. Right, starting in Cape Town.

Reporter: Paula Charles: eNews: Deputy President, can you take us through your grounds for appeal of the High Court ruling and why you believe it's a constitutional matter?

Reporter: McCormick Bloomberg News: Mr Deputy President, could you tell us, you mentioned you're considering an additional appropriation Bill to be able to meet financial obligations. What kind of money are we talking about here? And what kind of period are we talking about that you'll provide?

Reporter: Carol Paton from Business Day. During the original court application there were many confusing figures thrown about, about what it was going to cost to collect this money; what it was going to cost to collect through this method. Can you clarify how much is it going to cost you to collect the debt, using e-tolling and what would be the sort of lowest you could go in terms of the rates, looking at kilometre or whatever before the costs outweigh the actual collection?

Mr Jimmy Manyi: Any other questions? Okay, lets go to Pretoria. Are there any questions in Pretoria?

Reporter: [Unclear] from City Press: Deputy President, I'd like to find out if you think the alternatives that are available, especially with regard to public transport are adequate, because I suppose a lot of people are forced to use their cars. For example, the footprint of the Gautrain - [unclear] I thought I'd just find out whether you think the [unclear] are really sufficient to justify e-tolls. Thank you very much.

Reporter: Alex from Eyewitness News. You've gone through a lot of debate throughout the committee and you've obviously talked about it a great deal but what do you say to the fact that there's an impression here that the people have called for this to be stopped? There was really a sentiment, especially after the courts ruled at the North Gauteng High Court that this is what the people wanted and then there was the sentiment that government still continued to go against that. Can you just answer to that statement, please?

Reporter: Terence Creamer: Engineering News: Just on the issue of public consultation, what is the framework you have used for such consultation, given that you've already decided on the principle? What is the point of such a consultation and would you be proactive in pursuing that consultation or would you be reactive to people coming to you?

Convenor in Gauteng: That was the last question from Gauteng.

Mr Jimmy Manyi: Thank you very much. I think we'll just respond to these. The Deputy President is supported by a whole team of Ministers, DGs, the CEO of Sanral is also here but the Deputy President will appropriate the questions as he deems appropriate. Deputy President?

Deputy President Kgalema Motlanthe: Thank you very much for the questions. Let's start with the first one from Paula Charles. Grounds for appeal - we take a view that the Court Judge Principal overstepped the line in terms of essentially imposing a moratorium on the collection of fees which has huge implications, because Sanral has contractual obligations and in the agreements, if there is delay in payment, the period is reduced and so it creates very serious financial challenges to government as a whole, because now in the interim government has to look at other ways of servicing that debt, which means taking away money from other locations as it were. Hence the consideration of introducing this special Bill to enable government to continue keeping Sanral in a happy state of servicing the debt. So that's a constitutional matter because as you know, the three arms of the State have to work cooperatively with each other without encroaching on each other's responsibilities and authority. We believe that this judgement does exactly that and hence we need to test that in the Constitutional Court.

I've dealt with the second question, which is the special Bill in my response now. It was the second question related to the second Bill. It's really to enable government to allocate resources to the Ministry of Transport who in turn would forward it to Sanral. So it deals with the allocation outside of the normal budgetary processes.

Now, the figures Carol, you know at the beginning, the costs looked slightly higher because you have to set up many mechanisms and all of that, but once the system begins to work those costs will taper down. Now if public transport were adequate and I guess the question is really whether people have a choice or not. The real situation is that these roads were congested - in fact the rationale for improving them was also to decongest into the alternative routes and that is why even in the alternative routes [unclear] is taking place now so that people should have a choice and there are buses. 

As you know, transport between Pretoria and Johannesburg - there are buses, trains, including the Gautrain and so on. And the feeders, the Gautrain has buses, which currently also were running with very low complements of commuters. Now, the capacity to increase the number of buses exists. At any given time if there is a need for more buses, that can be handled with ease and cut off the benefits of the gantries that it can actually also help direct our vision of these buses. This is a system that was introduced in Tokyo many, many years ago to use the services along the routes around the city to direct the buses for the central depot so that commuters don't wait for more than five minutes. That was the Tokyo experience. Now I'm saying this is an additional application that can be introduced very easily with the gantries so that they are not just used for collecting fees. That's something that has to be considered.

Now, Eyewitness News - the sentiment of the people as well as the point of consultation - I've combined both questions from Pretoria. The purpose of consulting is really to understand and hear the other side and what is the nature of the concerns so that we can see if those concerns are not already covered by the current arrangements, then we'll have to go back and say well, there's a serious concern about this or that, go back to Cabinet. So that's the purpose of the consultation and that deals with the sentiment because as I said in the historical background there's always been consultation but of course, at no point would we as government say we don't want to listen to the concerns raised by citizens. We always have to listen. And if the explanation and answers that we give are inadequate we would have to go back to the drawing board and say well, this concern is real and quite obviously we have not covered every factor. But of course my colleagues, Minister Gordhan, Minister Ndebele, Minister Gigaba, Minister Chabane, Minister Molewa can add where I have not answered the question. Thanks.

Minister of Finance Pravin Gordhan: On Carol's question we can provide you with some numbers. We are aware that this is one of the areas raised as a point of concern. From what we've been informed the cost of collection would be about 20% once the initial phases have gone through to set up machinery and so on. And by international comparison in respect of these sorts of mechanisms that's fairly low. So we've satisfied ourselves that it is within acceptable limits if you like, in terms of international experience.

Minister of Transport S'bu Ndebele: We're covered. In terms of public transport it is actually quite adequate in terms of Metrorail, your Prasa Business Express, with Putco, Johannesburg metro buses. With Metrorail you are looking at a figure of R206 per month which people are using right from Soweto, Johannesburg and Pretoria. So in terms of public transport we are adequately covered and when we add the buses, even the Gautrain buses at the moment sometimes you find they're under-subscribed. 

Sometimes you find 15 people there, 20 people there and so forth. And we can increase the capacity any time. So that's one area. But for the motorist I think all of us should appreciate moving from 66c to 40c to 30c plus a frequent-user discount that are there; so that is what is currently on and of course with the option that the old routes have not been closed. They are there. They have been used over the years. This road that we are talking about only came into operation in May 2010. Before that people were travelling between Pretoria and Johannesburg and vice versa and so those are not closed. Instead they are being upgraded and still in use. So there is an array of options that are there. Also we want to bring the national perspective as well which I think is quite important from where we sit, that it should not be that we talk only about one road at the expense of the rest of the country, because if we went to the Eastern Cape, we went to the Western Cape, we went to all the provinces, roads are being built. In fact we are putting billions of money there on this particular road so that the construction of roads is going on and I think we will be accelerating now that we have just got through the budget.

Reporter: Good morning Mr Deputy President. James Tyron from Beeld. Just a number of issues if you don't mind. The first is the 33 subcontractors that the details have never been given out. Will you be releasing the names and the full details of those companies and when will you do that? The second question, I don't know who to direct this to, it might be to you as well Mr Deputy President - why did Mr Ali resign? What reason did he give? Was the question put to him by government and if not, did you try to dissuade him? Did you try to ask him to stay on? And then Mr Gordhan if I may, you said that the cost collection is plus-minus 20% once the initial phase is completed. How many years is that initial phase? Is that for the first five years and what is the percentage cost in the initial phase? If you can just indicate that if you don't mind and then just another question Mr Deputy President, related to your comment on the judge. You said that you believe the judge over-stepped the line in imposing a moratorium in the collection of fees because of the implications but would you comment on the delay that Cosatu and the ANC asked for? I mean surely that's the same thing, yet the one is advocated and now you're saying the other one is not. And just the last question to the panel I suppose, is government and Cabinet saying that by hook or by crook, pun not intended, you will be going ahead with e-toll regardless? If you can just comment on that.

Reporter: Andre Jordaan from SABC Radio. How soon will a decision be taken on whether to come to Parliament with an additional appropriation Bill and just what that involves? Is the treasury looking at taking over the full Sanral debt or is it just going to be an interim thing and of course what are the implications for the budget? Are you looking at a bigger deficit or trimming expenditure in other areas?

Reporter: Lukhanya Cabata from SABC TV. Just to add on to my colleague's question. I just need to know the money that obviously if government does come forward with this appropriation, how soon it will be introduced? How long does government expect to keep on paying this money towards the Transport Ministry and then on to Sanral. Thanks very much.

Reporter: Paul Vecchiato; I-Net Bridge. The money appropriated, could you tell us the total amount? One of the ratings agencies said that Sanral needed about R100 million. Well it had an expense of about R100 million per month. Could you confirm the monthly amount or cash that Sanral needs to operate? Thank you.

Reporter: Claire Besseker; Financial Mail. It's a question for Pravin Gordhan. What are the implications for the funding of the rest of the infrastructure programme should you not be successful in the courts and government's ability to rely extensively on the user-pay principle is seriously undermined?

Reporter: Desheek from Radio 786. I just wanted to know in terms of I think the question I asked earlier with regards to Cosatu, in fact, how has that relationship been because I think even up till now, Cosatu is still sticking that they will not support this, and just another thing, you spoke about the 2007 and it's the year you threw it down. The 2010 World Cup, leading up to the World Cup roads were improved and so on and there was a lot of construction. With this project are we solely just looking at the maintaining of roads or is this debt also part of the debt perhaps incurred with the 2010 World Cup?

Reporter: Good morning Ministers, Deputy President. Gay Davis, Independent Newspapers. Could you tell us what your time frame is now for the consultations? You've got to get the Bill through to manage the interim payment of the debt but how long are you prepared to continue in consultation because presumably there'd have to be a cut-off point. And also can you tell me to what extent or whether at all there was any consultation with the Government and Luthuli House before the ANC and Cosatu decided to call for the moratorium? Thank you. 

Deputy President Kgalema Motlanthe: Thank you. The 33 subcontractors, the names of the companies and all of that. What we want to do is to be transparent and any information that needs to be in the public space we will put on the website but of course, you know the main contracts, primary contracts are between government and the primary contractors. The subcontractors are contracted by the main contractors but of course there's no harm in putting the information in the public domain and we will do so. Minister Ndebele will respond to the other question relating to the CEO of Sanral.

Minister Sbu Ndebele: Thank you very much Deputy President. If you'll allow me, there was an old tradition of the Israelites during the biblical times when there are problems then the High Priest will get a goat and then everybody will then pile all the problems - "there is witchcraft because of this goat", "there is this because of this goat" and the goat would then be allowed to escape. That's where we got the name scapegoat, so we are not going to use anybody as a scapegoat.

Here is an excellent network in South Africa. We are hailed throughout the world, particularly after the World Cup, for an excellent network that has been presented by Sanral and sometimes people get so much pressure and they think they are being singled out personally and that sort of thing, so the issue of Nazir Alli who has been CEO of Sanral for a long time, we discussed when we received the letter of resignation because what he was trying to do was to say, "If I'm the problem, I want to remove myself" and we explained that he wasn't a problem, so that matter is therefore not on. We have discussed with him and the issue doesn't relate to a person, it relates to a decision that we took over years, over five years now, 2007 and onwards and we need to continue, particularly in this particular period because it's a difficult period. You need all the experience that you have from the Department of Transport, from the Government and from Sanral and therefore we want all hands on deck but it was his way of saying, "If I am the problem, I'm removing myself" and then of course we had to explain that he wasn't the problem.

Deputy President Kgalema Motlanthe: Thank you Minister Ndebele. The next question relates to the delays as suggested by or pronounced upon by Cosatu on the one hand and the judgment on the other. Cosatu I think kind of ran ahead of them because this is a matter for Government and it is what was affected. It's not what Cosatu announced but what the Government decided that there should be a postponement of collection by a month and that's very specific that it was a month. There's a date for the system to kick in. Now, on the other hand the judgment is open-ended. As we sit here, don't know how long it would take for the courts to make a determination on the matters before the court. In fact, our educated guess is that it may drag on until perhaps next August or so and it introduces so many uncertainties and that's why there's a challenge arising out of that decision. There is a decision of Cabinet that the method of collection be e-tolling and the consultations serve the purpose of understanding why there are concerns about. If there are no acceptable and reasonable explanations for the concerns, Cabinet should then be aware and consider that in its decisions but as of now, the decision of Cabinet stands. Then the question relating to the additional Bill, all four questions relate to the additional Bill. Will you deal with that Minister Gordhan?

Minister Pravin Gordhan: The estimate that Moody's gave was that Sanral would be losing approximately R270 million per month for each month that toll fees are not collected. That could increase if you take certain operational costs and so on by some estimates to even five or six hundred million Rands per month. If you take the perspective the Deputy President has just shared with you, we could be looking at a period between now and the end of the year, including any debt repayment that Sanral has to undertake and we believe that there's a payment due in January 2013 that will also have to be taken care of. So in the first instance, the additional appropriation Bill, which we are still considering, so when you read the statements, please remember to read the words considering introducing the additional appropriation Bill will try to take the next period of possibly six months or so and give both Sanral and its debtors the assurance that government is setting aside money to meet the cash flow requirements of Sanral.

The next question is where does that money come from and that's why we said we're considering. We don't know yet. There's a range of options including cutting all the budgets of my colleagues here and you can see they're smiling so they're very happy about it, so all of those options are being examined at the moment. We're tying to get a better handle on the numbers so that we can make a judgment call in respect of the Bill. Parliament goes into recess shortly so when we come back to Parliament, we'll have a better idea of whether we need the additional Bill, where we're going to get the money from and what are the amounts that need to be allocated for Sanral through the Department of Transport.

Claire, your point about implications for the rest of the infrastructure programme - I think it's very important that in the emotion around this issue, we as South Africans need to understand that there are limited sources of money from which we can pay for the things we desire, firstly. Secondly that when we borrow money, we borrow like any household would. You buy a car on hire-purchase but you pay for it over five years but you use the car from the day you buy it. You buy a house, you pay for it over 20 years but the day you take occupation and sign the documentations you start using the house. So, in simple terms, this is what we're doing here. We borrow the money through Sanral on the strength of the assets it has and the financial capability it has, we built the roads but the roads will have to be repaid as you know over a 24 year period and the element of user-pay or user charges is a crucial element anywhere in the world. So, we pay for electricity, we pay for telephones, we pay for water, we pay for sanitations, we pay for refuse removal. Those are user charges. Now the question is, are user charges cost-reflective and the public finance principle says user charges should be cost reflective. In other words you should recover the cost of the service that you're offering.

In the South African case, for many years we have taken the view as government that for certain income categories, the lower income categories in South Africa, we need to subsidise these services and so you have the free basic service allowance or subsidy, which goes to the provinces via the equitable share that we distribute to the provinces and municipalities are then expected to pass that on to consumers. Some of you might be familiar with this. Many of you might not be but that's the system through which you subsidise user charges in South Africa. So, it's very important that the principle of user-pay and of user charges is not undermined through this process and through the emotions and that we are able to sustain our ambitions to provide the kind of infrastructure that will both impact positively on our economic potential but also the environment in which our people live and get their basic services in a positive way by having a combination of resources from the fiscus, from the user-pay, from the user charges, from debt, that we actually involve ourselves in. And it's a combination and contributions from the private sector where public-private parterships (PPPs) are relevant. Those are different ways of mobilising resources in order to put the infrastructure system in place. I hope all of that helps. Thank you.

Deputy President Kgalema Motlanthe: Thank you Mr Gordhan. The next question is whether this whole e-toll system is for maintenance or servicing the debt incurred from the 2010 World Cup - was that the question? This is not linked to the FIFA World Cup at all. It's mainly for firstly servicing the debt for the upgrading of the roads and maintenance of the roads because with efficient road systems, it also will increase levels of productivity because movement of goods and people would be this much faster but it's not linked to the FIFA World Cup at all. Construction may have coincided.

The timetable for consultation, yes we want to commence with consultation sooner than yesterday actually but of course once there's nobody to consult, the consultation will come to an end. Remember, we're doing this also within the timeline, having to wait for the courts to make a determination on this matter. Thanks. I think that takes care of all the questions.

The discussions between Cosatu and the ANC, what the ANC does really are just to recommend to government and share with government whatever is arrived at in those consultations. Remember the ANC is a non-governmental organisation so it relates to government the same way as all other NGOs do. 

Issued by Government Communications (GCIS), June 4 2012

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